Multi Party Agreement between Arizona Public Service Company (“APS”), the City of Goodyear (“Goodyear”) and the City of Buckeye (“Buckeye”) to accept Municipal Brackish Water (Brine) into Palo Verde Nuclear Generating Stations (“PVGS”) water reclamation supply system pipeline.

Approve the Agreement Regarding Collaborative Efforts to Accept Municipal Brackish Water in the Water Reclamation Supply System by and between Arizona Public Service Company, the City of Goodyear and the City of Buckeye and authorize expenditure of funds up to $1.0 million. (Barbara Chappell, Deputy Public Works Director)

The cost to Arizona Public Service (APS) to complete a pilot test and design of improvements necessary for PVGS to accept brackish water into its water reclamation supply system and minimize impacts of this water supply to its operations is $2 million. This work will be administered by APS and the costs will be shared equally between the city of Goodyear and the City of Buckeye.  However, the payment obligation is joint and several, so if Buckeye were to terminate this agreement, Goodyear would be responsible for the full amount of the payments outstanding at the time of the agreement. 

Funds to cover Goodyear’s $1 million share are available in approved FY2023 capital improvement project 60034 Brine Disposal.

Historically all of the brine concentrate produced from our reverse osmosis groundwater treatment facilities has been disposed of via the city’s sewer system and passed through the Goodyear Water Reclamation Facility (GWRF). This practice poses a few challenges: 1) it takes up capacity in the GWRF that could be used for development; 2) the quality of the concentrate does not meet the city’s Pretreatment Program’s local limits; 3) the constituents in the concentrate may impact the biology and compliance status of the GWRF.

In 2019, the City completed a Brine Management Study to explore options for disposal/treatment of the concentrate. The study resulted in two paths forward:

1. Install centralized treatment of the concentrate adjacent to the GWRF where the treatment would dewater the concentrate to a zero liquid discharge and could be disposed of in a landfill. This option would be close to $100 million and have an ongoing cost of $8 million annually for operations and maintenance (O&M). A phased approach was chosen, and a project created to treat only the concentrate produced at Bullard Water Campus for $60 million and an ongoing O&M budget of $5 million.
    
2. Collaborate with the PVGS and develop an Agreement to discharge concentrate into the water reclamation supply system pipeline, which conveys discharges from the 91st Avenue Water Reclamation Facility to PVGS, which is located on the south side of the GWRF. The city would fund infrastructure needed to mitigate impacts of the brine to their water treatment facilities and annual operation and maintenance costs to treat the brine.

In July 2020, the city entered into a Memorandum of Understanding with PVGS to study the impacts of the concentrate to the operations of the power plant. The study identified a need for future study and Agreement to better define the solution to mitigate the impacts. This Agreement is a result of that MOU.  Staff updated the CIP project to include this option moving forward.

The City of Buckeye is looking at installing reverse osmosis treatment for its groundwater so they too will be in need of a brine disposal solution. The City of Goodyear and APS have invited the City of Buckeye to partner with us on this Agreement.

This agreement provides for an enhanced evaporation pilot test and associated analysis using equipment from two different manufacturers, the development of designs that identify the equipment and sizing of infrastructure needed to allow Goodyear and Buckeye to deliver brackish water to PVGS while mitigating the impacts of the introduction of the brackish water  and cost estimates for purchase and installation of equipment and the construction of infrastructure improvements needed to implement the agreed upon design (the “Work”).  Under the terms of the agreement, APS will control the project, contracting with the service providers who are to perform the Work (the “Service Providers”).  Goodyear and Buckeye are to split the costs of the Work equally, but the payment obligation is joint and several, so if Buckeye were to terminate the contract, Goodyear would be responsible for all outstanding payments.  The cost of the Work is subject to a maximum cost of $2,000,000. 

The pilot test will compare two different manufacturer’s enhanced evaporation units to select the one that best meets APS’ needs for operation and maintenance going forward.  If the pilot test fails to demonstrate that the improvements can be made to the PVGS water reclamation supply system pipeline (the “WRSS”) and to PVGS Water Resource Facility (the “WRF”) that would allow Goodyear and Buckeye to deliver brackish water through the WRSS to the WRF without significant and unexpected impacts to the WRSS or the WRF, then the city will have to pursue the alternative solution of installing centralized treatment of the concentrate adjacent to the GWRF where the treatment would dewater the concentrate to a zero liquid discharge and could be disposed of in a landfill.

If the pilot test confirms that improvements can be made to the WRSS and to the WRF that would allow Goodyear and Buckeye to deliver brackish water through the WRSS to the WRF, which then could be used for cooling purposes, and assuming there are no significant unexpected conditions, APS has agreed to enter into good faith negotiations for a long-term agreement that would allow Goodyear and Buckeye to distribute brackish water into the WRSS for use as cooling water for PVGS.  

The future agreement will require:

• the Municipalities fund the costs of the improvements to the WRF and WRSS needed for each to deliver their respective Brackish Water to the WRSS;
• to pay an access fee for use of the WRF and WRSS;
• to pay Operating and Maintenance Costs to cover APS’s additional costs of operating the systems and the maintenance, repair, and periodic replacement of the systems improvements;
• to commit to deliver agreed-upon amounts of Brackish Water to the WRSS, and
• if agreed to, will provide for periodic modifications to the Operating and Maintenance costs, which would be based on documented costs provide by APS. 

If the conditions set forth above are satisfied and APS fails to enter into a long-term agreement, the following would occur:

• Goodyear will have the right to a license to use the intellectual property or be reimbursed for the value of the intellectual property, the value of which is agreed to be $300,000 or the City could terminate the license and APS would pay a license termination fee, and
• APS will reimburse Goodyear the costs incurred for this Agreement less the value of the license termination fee paid by APS. 

As a condition of this agreement, Goodyear and Buckeye are required, to the extent permitted by law, to indemnify, defend, and hold APS harmless against any liabilities APS incurs to the Service Provider that arise from or are related to APS’ role as project manager for the Work under the agreement, so long as any underlying action or failure to act was within the scope of the obligations and authority of APS under this Agreement, or otherwise taken or not taken in the reasonable and good faith belief that such action or failure to act was in accordance with APS’ obligations and authority under this agreement or otherwise in the best interests of Goodyear and Buckeye.  The Indemnification does not apply to any liability or claims arising from, alleged to have arisen from, or that are related to any of the following: (i) a loss of service; (ii) damage to any APS equipment and/or APS Facility; (iii) damage to any Red Hawk equipment and/or Red Hawk facility; and (iv) any breach of the contract between APS and any Service Provider, unless that breach was caused, in whole or in part, by any action of the Municipalities that the Municipalities knew, or should have known, could cause the breach. 

Staff recommends approval of the Agreement Regarding Collaborative Efforts to Accept Municipal Brackish Water Into the Water Reclamation Supply System as it could lead to a brine solution that would be far less expensive than the alternative solution of installing centralized treatment of the concentrate adjacent to the GWRF where the treatment would dewater the concentrate to a zero liquid discharge and could be disposed of in a landfill.